ASIA FX: USD/KRW Slumps As FinMin Moves To Address FX Imbalances
The best performer in EM Asia FX so far today has been KRW, up 0.80%, as the FinMin stated it would launch efforts to stabilize the FX demand/supply imbalance (including discussions with the National Pension Service (NPS)). We have seen steadier trends elsewhere, with CNH holding the bulk of its recent gains. MYR has lost a little ground, while IDR is off recent highs.
- Earlier highs in spot USD/KRW were close to 1475, before headlines hit that the authorities will step up efforts to improve the FX demand/supply imbalance. The pair was last around 1454, close to session lows. The 20-day EMA is back near 1444, but NPS hedging resumes it should help put a cap in the pair around the 1470/80 region. Implied vols are higher but within recent ranges. The 1 month risk reversal is trending back towards flat and dips sub this level can coincide with further USD/KRW losses if history is a guide.
- USD/CNH sits unhanged around 7.0960, with generally weaker than expected data (particularly on the investment and property side) offset by fresh USD/CNY fixing lows and on-going policy efforts to boost yuan use. Downside risks in USD/CNH may still prevail, with 7.0851, the mid Sep low not too far away Our policy team noted - The PBoC will promote the cross-border use of the yuan in trade, investment and financing, and provide more products to facilitate foreign investor participation in the stock and bond markets, while improving the payment system and incorporating the currency's use into multilateral and bilateral agreement frameworks, Deputy Governor Tao Ling said Friday at the Caixin Summit 2025.
- USD/TWD continues to track higher, despite a sharp rise in local yields, as the market pares back rate cut expectations. We were last near 31.12, close to multi month highs. Local equities have been under pressure amid broader tech headwinds, which is also driving offshore investor outflows.
- USD/MYR has steadied just above the 4.1300 level. This is helping to correct overbought conditions. Q3 GDP revisions painted a firm picture for Malaysian growth though, suggesting upticks will be sold.
- The Rupiah is set to finish with a weekly loss, despite a decent rally Friday. With modest gains today, the Rupiah staved off three days of losses to move back towards 16,700.
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NORWAY: DN Reports 2.8% of Pension Fund Spending In 2026
"*NORWAY TO SPEND 2.8% OF WEALTH FUND IN 2026 BUDGET, DN REPORTS" Bloomberg
That would be in line with Norges Bank expectations (and also a couple of the sellside estimates we had seen ahead of today's release)
NORWAY: 2026 Budget Proposal Due This Morning
The Norwegian 2026 budget proposal will be released today. Most market-relevant information will be released at 0700BST/0800CET, with the full budget presented at 0900BST.
- At 0700BST, the following “key figures” for 2026 will be released:
- Non-oil and structural non-oil deficit spending in NOK.
- Structural non-oil deficit spending as a % of Government pension fund assets (fiscal rule stipulates maximum spending of 3% of the GPFG).
- Structural non-oil deficit as a % of mainland GDP.
- Fiscal impulse (defined as the change in 3. relative to 2025)
- Summary of updated Govt’ macroeconomic forecasts.
- At 0900BST, the full budget will be presented, including details of polices and a full breakdown of fiscal figures (which analysts use to estimate Norges Bank FX transactions for the year ahead).
- In the September MPR, Norges Bank projected the structural non-oil deficit spending at 2.8% of the GPFG (vs 2.7% in 2025). Deviations from this forecast will feed into subsequent rate path projections.
- Note that support to Ukraine (which doesn’t provide an impulse to mainland activity) is included in the Government’s fiscal rule.
- The budget proposal will also inform analysts’ NGB issuance expectations for next year.
- Following today's proposals, the Government will negotiate with supporting Parties to finalise the budget by December. PM Store’s Labour party won the election in September, but relies on support from the Centre, Socialist Left, Green and Red Parties to have a majority in the Storting. Reliance on these smaller and mostly left-leaning parties will factor into budget discussions, with areas such as wealth taxes and welfare spending in focus.
EURGBP TECHS: Support Intact For Now
- RES 4: 0.8835 High May 3 2023
- RES 3: 0.8800 Round number resistance
- RES 2: 0.8769 High Jul 28 and the bull trigger
- RES 1: 0.8725/8751 High Oct 10 / High Sep 25
- PRICE: 0.8703 @ 06:46 BST Oct 15
- SUP 1: 0.8677/8656 50-day EMA / Low Aug 10
- SUP 2: 0.8633 Low Sep 15
- SUP 3: 0.8597 Low Aug 14 and key support
- SUP 4: 0.8562 50.0% retracement May 29 - Jul 28 upleg
The trend condition in EURGBP remains bullish and recent weakness appears corrective. Support to monitor lies at the 50-day EMA, at 0.8677. It has been pierced, a clear break of this level would signal scope for a deeper retracement towards 0.8633, the Sep 15 low. Key trend support lies at 0.8597, the Aug 14 low. On the upside, key resistance and the bull trigger is unchanged at 0.8769, the Jul 28 high.
